PSU banks need more capital; don't rush to buy them now, say analysts

After the RBI's day-long board meet on Monday, the central bank decided to consider relaxing lending norms for banks under the PCA

The resolution to look at capital requirements for banks and changes to the prompt and corrective (PCA) framework are not enough reasons for investors to rush and buy public sector banks right now, say analysts.

After the Reserve Bank of India’s (RBI’s) day-long board meet on Monday, the central bank decided to consider relaxing lending norms for banks under the PCA and set up a committee to discuss the transfer of surplus reserves to the government.

Analysts at Nomura feel enabling more public sector banks to come out of the PCA framework will require more upfront capital injection